Preparation

Where do you begin to secure finances for purchasing a new home, refinancing an existing home, or obtaining a real estate equity line of credit? Obtaining a real estate loan can be confusing. You can simplify the process and avoid a lot of potential headaches by getting off to a good start. Here are a couple of ways to do so:

Build your 'Green File'
Organizing and compiling all your pertinent financial documents into a 'green file' (think 'green' for money) is an absolute must for any potential borrower. Your green file is a resume or profile that will give lenders an idea of what kind of debtor you might be. The typical green file should contain:

• Financial statements
  
• Bank accounts
  
• Investment records
  
• Credit card information
  
• Auto loans
  
• Other indebtedness
  
• Recent pay stubs
  
• Tax returns for two years

Consider your Credit Rating
Another means by which lenders gauge your trustworthiness as a borrower is through your credit rating. Credit ratings tracks your credit history , which includes such crucial information as the number of your open loans and the punctuality of your payments.

Treat your credit like gold. Credit ratings are important because they determine whether or not you will be approved for a loan and what your interest rate wll be. Thus, you cannot take your credit rating seriously enough! We suggest checking your credit reports at least once a year or before making any major purchase to ensure the accuracy of the information.
What the scores mean. Ratings usually vary between 400 and 800. Anything above 620 is good. If you exceed 680, you are considered premium and may even get a lower interest rate.
Determine your credit rating. You can do this by contacting a credit reporting agency such as Equifax, Experian or Trans Union. Above all, don't hesitate to consult with your lender if you need to improve your rating.

Prioritize your Costs and Savings
Buying real estate wisely is all about credit and interest terms.

Prioritize your costs. Down payments, closing costs and additional expenses (such as surveys and inspections) should be at the top of your list. On the other hand, be sure to pay down on your current revolving and high-interest rate debts, such as credit cards, because this will influence your credit rating and interest rate.
Remember: lenders like stability. Instill confidence in your potential lender by avoiding any big, sudden moves both in your career and your finances. If that job change or big budget purchase absolutely cannot be postponed, check with your lender first and consider the consequences. I can direct you to various financial institutions and mortgage companies that are familier with the Greater Toronto Area.
For more information on these issues, contact Michael Francinelli @ (416)-402-2134.

Selection

Choose a Lender (Mortgage Company).

Securing finances requires a decision that you may have to live with for many years-so spend time comparing the terms and conditions of different lenders, before making your choice. There are a number of ways to find a willing lender, whether through traditional print ads, Realtor referrals or Internet sources. There are also several considerations to keep in mind when shopping for the right lender and program:

• Price. Consider the competitiveness of a lender's terms with that of others, especially for mortgage rates, interest rates, and additional closing costs and points.
• Diversity of products. Price is important but by no means should it be your only determining factor. How extensive is the lender's range of offered loan programs? Check the availability of the loan program most appropriate to your credit profile and property.
  Rapport. Do your lenders and brokers communicate effectively and thoroughly? Are they attentive and prompt? You aren't looking for just a guide but a partner -someone you can work with and trust every step of the way.
• Connections. Check whether the lender has access to local loan approval committees that understand your goals as a borrower.